Subprime and High Interest Rate Mortgage Lending in the Washington, D.C., Region

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Abstract

This fact sheet looks at the latest data on subprime mortgage lending and high interest rate loans from the Home Mortgage Disclosure Act (HMDA) for the 25 jurisdictions that make up the Washington, D.C., metropolitan area.

The text below is an excerpt from the full document. Read the complete factsheet in PDF format.

Introduction

There is increasing concern around the country with the amount of subprime and high cost mortgages issued in recent years. Subprime lending has made credit available to households with low incomes or credit scores that would not allow them to qualify for prime-rate loans. Nevertheless, as is now becoming all too clear, subprime lending can be detrimental if borrowers who take out higher-cost loans later have difficulty repaying them and risk defaulting on those loans.

This fact sheet looks at the latest data on subprime mortgage lending and high interest rate loans from the Home Mortgage Disclosure Act (HMDA) for the 25 jurisdictions that make up the Washington, D.C., metropolitan area. A full set of supporting tables and charts with the data discussed in this fact sheet can be found on the NeighborhoodInfo DC web site: http://www.NeighborhoodInfoDC.org/subprime.

Subprime Lenders

Subprime loans are those that have higher costs (such as higher interest rates) than prime loans. Subprime loans are designed for applicants with poor credit histories, high loan-to-home-value ratios, or other credit risk characteristics that would disqualify them from lower cost, prime-rate loans. The U.S. Department of Housing and Urban Development (HUD) classifies mortgage lenders as specialists if such subprime loans account for at least half of their conventional (i.e., not government-backed or insured) business. HUD also uses feedback from lenders, policy analysts, and housing advocacy groups to update the list of subprime lenders (Pettit and Droesch 2005, 8).

By matching HUD's subprime lender list to HMDA loan records, we can track lending by subprime specialists from 1997 to 2005.

The complete factsheet is available in PDF format.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.